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The Cost of a Bad Hire: 30% of an employee’s first year earnings

A mis-hire calculator, Boeing's CEO will rake in $32.8M in 2024 and pride month should be more than a logo change in June

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The Deputy
June 27, 2024

“Find ballplayers. Not those who look good in baseball caps.”

Tom Monahan

But first a cheesy Sumato Coffee break story ☕️

Dave, the hardest worker in the office, couldn't avoid coffee stains on his shirt, despite loving his Sumato Coffee. One day, while presenting, he spilled coffee on himself again. His colleagues laughed and suggested he model coffee-stain-patterned shirts, making him embrace his unique, hardworking style.

Coffee Options

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In today’s email:

  • Job News:  The Cost of a Bad Hire? 30% of their first year salary.

  • Overheard at coffee: Dave Calhoun failed as CEO of Boeing, then agreed to stay on for the rest of 2024 for $32.8M

  • Trending AI Tools: An AI career counselor for students and job seekers.

  • Hot Jobs: (keep scrolling down ⬇️)

  • Recruiting Fails: Pride Month: More than a logo change ❌

Job News

In the heart of a bustling tech company, TechNova (name changed for anonymity), the excitement was palpable as they prepared to welcome their new Senior Product Manager, Alex (name changed for anonymity) who was coming from a Big Tech company out of Seattle. With an impressive resume and a salary of $200K per year, Alex seemed like the perfect fit to lead a crucial project aimed at launching their next big product. Little did they know, this decision would soon lead to a series of unforeseen struggles.

Within the first few months, it became apparent that Alex was not living up to expectations. While his resume showcased extensive experience, his ability to listen and connect with TechNova's team, direct manager and collaborate effectively with the team was lacking. Not only did Alex talk more than he listened, the project he was leading started missing key deadlines, causing a ripple effect across the entire department. Alex was starting to get eye rolls when it came to his turn to speak on zoom meetings. 

The first major struggle was the impact on team morale. Alex's leadership style was more of the “boss is always right” but he contradicted himself by questioning his direct boss and going around the boss to get things he wanted. This lead to frustration and disengagement among team members. The once vibrant and innovative atmosphere of the product team turned tense and unproductive. High-performing employees began to lose motivation, and some even started looking for opportunities elsewhere.

Financially, the cost was significant. Delays in the project launch led to missed market opportunities and a potential revenue loss estimated at over $500K. Additionally, TechNova had invested heavily in marketing campaigns and partnerships based on the expected launch date, further compounding their losses.

The HR department faced its own set of challenges. They had to navigate the complexities of managing the situation with Alex while addressing the growing concerns of the team. Performance reviews and remediation efforts consumed countless hours, diverting attention from other critical HR functions.

The hiring manager was smart. He knew Alex was not the hire and owned up to his mistakes and after three grueling months, the decision was made to part ways with Alex. The severance package and associated legal fees added another $50K to the overall cost. The recruitment process had to start anew, incurring additional expenses in search fees, advertising, and interviewing candidates.

The ripple effects of this bad hire were felt company-wide. The IT department had to delay other projects to support the floundering product launch, causing a backlog in their work. Customer service teams had to deal with inquiries and complaints due to the delayed release, straining their resources and impacting customer satisfaction.

In total, the cost of this bad hire, when factoring in lost productivity, decreased team morale, and direct financial losses, was estimated to be nearly $1 million. TechNova learned a valuable lesson about the importance of thorough vetting and the true cost of a bad hire.

The company took several steps to prevent such an occurrence in the future. They implemented a more rigorous interview process, including practical assessments and team-based evaluations. They also invested in leadership training and better onboarding programs to ensure new hires could integrate seamlessly and lead effectively.

While the experience was costly, it ultimately led to a stronger, more resilient hiring process. TechNova emerged from the ordeal with a renewed focus on quality and a commitment to building a cohesive, high-performing team.

Learn from the mistakes of others. Don’t be like TechNova, get clear about your hiring criteria and be sure to connect with your new hires. 

Lastly - here is a “mis-hire-calculator” from our Topgrading partners. Check it out before you make your next big hire. It might save you a few bucks and headaches. 

Overheard at coffee ☕️

Speaking of bad hires, Boeing made a significant mistake hiring Dave Calhoun as CEO in 2019. For a template on handling underperforming employees, look at the Senate's review of Calhoun, who will earn $32.8 million this year while Boeing looks for their next CEO. In case you didn’t know, Boeing has faced severe challenges in recent years, affecting its operations, safety reputation, and financial stability.

Take a moment to watch this video on X/Twitter (link below) with your coffee—it’s worth three minutes. While it's important to believe everyone tries their best, it’s tough to justify a $32.8 million salary amidst such turmoil, especially when tasked with staying on until the end of 2024.

PS - Does Mr. Calhoun still get COBRA benefits?

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Recruiting Fails: It’s towards the end of Pride Month, and businesses are waving their rainbow flags and changing their logos, not just to snag more customers but to show they care about diversity and the LGBTQ+ community. But beware of rainbow washing—when companies splash on the rainbow colors for June and revert to their regular branding as soon as July rolls in.

No matter what your company does, bring your A-game every day. Seek out places where you’re celebrated all year round, not just tolerated for one month.

If you are going to celebrate Pride Month beyond a logo change, according to a study done by survey monkey, you will do more social good by hosting educational workshops or panel discussions on LGBTQ+ topics. See this study from survey monkey on social good vs. profits with Pride Month. 

A recruiting fail with pride month is saying you value diversity of thoughts during the interview process, but actually not doing anything to make your company more inclusive. Talk is cheap.

Do you have recruiting Fail Stories? Reply with your epic fails – we'll feature them. Own your blunders, embrace vulnerability, and let's all level up together.

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